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609 1°/59 Minutes for September 23, 1960 To: Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement With respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If you were present at the meeting, your initials will Indicate approval of the minutes. If you were not present, Your initials will indicate only that you have seen the minutes. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King C 3600 Minutes of the Board of Governors of the Federal Reserve System on Friday, September 23, 1960. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Thomas, Adviser to the Board Young, Adviser to the Board Molony, Assistant to the Board Noyes, Director, Division of Research and Statistics Koch, Adviser, Division of Research and Statistics Sammons, Associate Adviser, Division of International Finance Keir, Chief, Government Finance Section, Division of Research and Statistics Gemmill, Economist, Division of International Finance Money market review. Messrs. Thomas and Keir reported on bank Iseserves and developments in the money market, including the Treasury's Milance refunding of certain intermediate-term bonds. Messrs. Molony, Koch, Sammons, Keir, and Gemmill then withdrew Messrs. HacklPy, General Counsel; O'Connell and Hooff, Assistant a " .ieral Counsel; and Nelson, Assistant Director, Division of Examinations, entered the room. Discount rates. The establishment without change by the Federal Ileserve Banks of New York, Philadelphia, Cleveland, Richmond, St. Louis, sas City, Minneapolis, and Dallas on September 22, 1960, of the rates 3601 9/23/60 -2-- on discounts and advances in their existing schedules was approved Un animously, with the understanding that appropriate advice would be sent to those Banks. Items circulated or distributed to the Board. The following items, Which had been circulated or distributed to the Board and copies of l'hich are attached to these minutes under the respective item numbers indicated, were approved unanimously. Item No. Letter to The Oregon Bank, Portland, Oregon, approving all extension of time to establish a branch at The Dalles. 1 li,etter to the Federal Reserve Bank of New York approving 1,t8 acting as fiscal agent for the International Bank for "econstruction and Development in respect to a proposed 18811e of Two Year Bonds of 1960, due October 1, 1962. 2 tter to the Stockments Bank, Gillette, Wyoming, granting 8 request for permission to exercise fiduciary powers. etter to the Union National Bank of Laredo, Laredo, e3c8.8) approving its application for fiduciary powers. Northwest Bancorporation--Roseville Bank (Item No. 5). 3 4 A memorandum clated September 22, 1960, from Mr. OtConnell, Assistant General Counsel, had been distributed in connection with the hearing ordered by the Board in l'egard to the application of Northwest Bancorporation to acquire shares of the proposed Roseville Northwestern National Bank, St. Paul, Minnesota. The raernorandum stated that attorneys for five banks in the area of the proposed barlk had appealed to the Board from an order of the Hearing Officer denying the Petitioners' request to participate in the hearing in the capacity of 9/23/60 " -3- •parties", with right of cross-examination and presentation of evidence, argument, and briefs. Although the Hearing Officer had denied the request of the petitioners to participate as parties in the hearing, he had granted their request to offer testimony and had specified the terms under which that permission was granted. In essence, the petitioners asserted that their legal rights would be adversely affected by a decision aPproving the proposed acquisition; that if the Hearing Officer's order lotS enforced there would not be a full hearing with full disclosure of the facts; that they were entitled to frame the hearing record precedent to possible appeal from an adverse decision; and that the Board's Rules for Formal Hearings contemplate full participation in a public hearing by all parties directly interested and directly affected. Attached to the memorandum was a draft of an Order affirming the order of the Hearing Officer. The Order was approved unanimously. item No. A copy is attached as 5. Report on competitive factors (Woodbury, New Jersey). A memo- randum dated September 20, 1960, from the Division of Examinations had been distributed submitting a proposed report to the Comptroller of the Currency on the competitive factors involved in a proposed consolidation °f The First National Bank and Trust Company of Woodbury, Woodbury, N'ew Jersey, with Woodbury Trust Company, Woodbury, New Jersey. The °Ilelusion of the report stated in part that the proposed transaction 9/23/6o -4- would consolidate two successful independent institutions under common ownership and management and would eliminate competition. Following a discussion of the banking characteristics of the area, certain suggestions were made for changes in the wording of the conclusion of the report. The report was then approved unanimously in a form reflecting these suggestions. The conclusion in the report, as subsequently transmitted to the Comptroller of the Currency, read as follows: Each of the banks involved in the proposed consolidation has a demonstrated capacity to compete successfully for banking business in and around Woodbury. It is indicated that consummation of instant application would consolidate two successful independent institutions under common ownership and management and would reduce competition in the immediate area. During the foregoing discussion Mrs. Semis, Technical Assistant, office of the Secretary, entered the room. Proposed study by Social Science Research Council. A memorandum dated September 22, 1960, from Messrs. Young and Noyes had been distributed in connection with a proposed study by the Social Science Research Council. The memorandum stated that Dr. Paul Webbink, Vice President of the Council, 44 recently inquired whether the Board might be interested in collaborating 141th the Council in a research project that it was believed might be of sPecial interest to the Board and its staff as well as to the Council of conomic Advisers. The project was an outgrowth of recommendations by the Social Science Research Council's Committee on Economic Stabilization, 3 9/23/60 )1r -5- based on a year's survey of research needs in the area of stabilization analysis and policy. The project would undertake to explore the potenti- alities of econometric methods of projecting the economy's future Performance and assess the utility of these methods as a supplement to Other approaches to economic projection. The memorandum went on to say that the project plans called for enlisting the efforts of a group of about a dozen scholars, each of whom would be assigned the task of developing and testing alternative econometric approaches to the analysis of fluctuations in a specific area of economic activity such as consumption, housing, investment, prices, etc. 14as planned as a two-year exercise. The project Each participant would be expected to spend the first year primarily in developing an intimate knowledge of existing statistical materials in his designated area and in evaluating known experiments that had employed econometric methods. The group would fleet for a three-week session in the summer of 1961 to review progress and integrate approaches. The following academic year would be devoted to organizing data in more final form and testing of formulations, with a final review session scheduled for the summer of 1962. Total costs were estimated at about $100,000. The memorandum pointed out that the Board's flow of funds accounts Illight well provide the statistical framework for much of the analysis, ella recommended that the Board authorize the staff to explore the matter fnrther with the Social Science Research Council. 9/23/6o -6In discussion it was brought out that the academicians who were committed to participate in the survey were a distinguished group; that one member of the Board's staff--Mr. Brill--had been approached about 'working with the group, and several others had been approached about offering assistance to the participants; and that the Social Science Research Council was a highly respected non-profit organization established under the auspices of private foundations. The Board had already particiPated in one satisfactory project with the Council, namely, a research training institute for teachers of money and banking that was held in the summer of 1957. It VBS stated that as the project took shape the Council had come to believe that within the Government, particularly the Pederal Reserve and the Council of Economic Advisers, a sufficient element Public interest might be involved in the completion of the project to justify financial support of the program. Question was raised as to whether the inquiry had seemed to contemplate that the Federal Reserve might underwrite the entire cost Of $1001000 or whether there would be additional subscribers, to which the reply was made that apparently the problem of the Council would be 8implified if the Federal Reserve were to underwrite the entire cost, although the Council no doubt would be glad to have the Board support even a part of the program. The project was a complicated one in essence, and having a combination of financial underwriters would increase its complexity. 9/23/60 -7Inquiry was made as to what amount of Mr. Brill's time might be required, if the Board were to authorize his participation, in response to which it was pointed out that, since the academicians who were particiDating would not be on leaves of absence but would handle their assignments for the Council in addition to their usual professional duties, the same sort of arrangements apparently would be contemplated for Mr. Brill and anY other staff members who might be authorized to participate. Governor Mills indicated that he had some doubt as to whether the Board should finance an outside organization in a project of this kind. If the project had the promise that seemed to be expected of it, it would in a sense be similar to the Talle Subcommittee studies that the Board Undertook several years ago pursuant to Congressional request, and if that were the approach the study perhaps should be focussed entirely in the Board. Therefore, while he would explore the matter further, he would avoid any encouragement of financial support at this point. If the Social Science Research Council had its origin in support by the Carnegie Institution and the Rockefeller Foundation, it would appear as though the project should be foundation-supported, except for the participation cif Mr. Brill without interruption of his compensation from the Board. After further discussion the staff was authorized to explore further the possibilities of participation in the project without, however, aving any commitment for financial support of the program by the Board. It vas understood that the staff would then report back to the Board. 9/23/6o -8During the foregoing discussion Messrs. Johnson, Director, and SPrecher, Assistant Director, Division of Personnel Administration, entered the room. At its conclusion Messrs. Thomas, Young, Noyes, and O'Connell withdrew from the meeting. Retirement allowances of certain disabled employees (Item No. 6). A memorandum dated September 16, 1960, from the Division of Personnel Administration had been circulated in regard to supplemental retirement allowances of certain disabled retirees of the Federal Reserve Banks. The memorandum pointed out that on June 29, 1960, the Board approved a proposal submitted by the Presidents' Conference for supplementing the retirement allowances of specified groups of Reserve Bank employees who retired before becoming eligible for Social Security benefits. The aPProval was given subject to the condition that increased allowances be deferred until age 50 for any retirees in the specified groups who had not Yet reached that age. However, it was recognized that proposed legislation was then before the Congress removing the age 50 requirement for drawing similar Social Security disability benefits. Approval of that legislation was imminent at the time the Presidents' Conference met °II September 12, 1960, and the Conference voted that, if the legislation 14se enacted, the requirement of attaining age 50 be removed also for Reserve Bask retirees. The law in question was signed by the President °4 September 13) 1960, and the Division of Personnel Administration therefore recommended that the Board approve the action of the Presidents' 9/23/60 -9- Conference. A draft of letter to the Chairman of the Presidents' Confer- ence reflecting that approval was attached to the memorandum. After a brief discussion, during which Governor Robertson stated that although he would not vote to disapprove the recommendation he considered this another step in the wrong direction because it followed the principle of equating Reserve Bank employees with Government employees whenever it was to their advantage, the letter was approved unanimously. A copy is attached as Item No. 6. It was also understood that letters would be sent to the five Federal Reserve Banks concerned authorizing them to make the necessary payments to the Retirement System. Payment of retirement benefits (Item No. 7). A memorandum dated September 16, 1960, from the Division of Personnel Administration had been circulated in connection with the approval on September Public Law 6, 1960, of 86-713, amending the Civil Service Retirement Act. The effect of the law was to provide a day-after concept for the commencement annuities and survivor benefits in lieu of the first-of-the-month c°11cept previously contained in the Civil Service Retirement Act. It 4180 eliminated the previous provision that annuities accrue and are PaYable for full months only and substituted a provision allowing accrual 44a Payment of retirement annuities for any portion of a month up to the Point at which the right to further annuity payment ceases because of cle8th (or other terminating event). Under established Board practice, the Provisions of the Act would automatically be applied to the Board 9/23/60 -10- Plan of the Retirement System of the Federal Reserve Banks unless the Board took adverse action. The memorandum recommended that the Board Interpose no objection, and a draft of letter to that effect to the Secretary of the Retirement System of the Federal Reserve Banks was attached. After a brief discussion, the letter was approved unanimously. A copy is attached as Item No. 7. Mr. Chase, Assistant General Counsel, joined the meeting during consideration of the foregoing item. Arizona banking study (Items 8 and 9). Drafts of two letters had been circulated, one to the Federal Reserve Bank of San Francisco end the other to the Comptroller of the Currency, in regard to a request from the Assistant Chief of the Los Angeles Office, Antitrust Division, DePartment of Justice, for information to expand table 3 in the San Francisco Reserve Bank's study "Investigation of Banking in Arizona" to include the years 1951 through 1954 and 1956 to 1960. In order to comply with the request, it would be necessary for the San Francisco Bank to obtain certain call report data. The information was requested for one State member bank, three national banks, and several nonmember Insured banks. The San Francisco Reserve Bank had inquired if the Published information requested should be furnished and if, in regard t° the three national banks, the consent of the Comptroller of the ellrrency should be obtained. The Reserve Bank also stated that it 9/23/60 -11- intended to suggest to the Justice Department official that he apply directly to the Federal Deposit Insurance Corporation for the information needed in regard to the nonmember insured banks. The circulated draft of reply to the San Francisco Bank expressed the Board's approval of furnishing the information in regard to the 'member State bank, and the letter to the Comptroller of the Currency asked his opinion as to furnishing the information regarding the three national banks. During discussion, the comment was made by Governor Mills that although he had always had serious reservations about furnishing unpublished information, either to Government agencies or others, it seemed appropriate to comply with this request. Having furnished the original study of banking in Arizona to the Department of Justice, it would not seem logical to refuse information on banking institutions involved in that study to aUPPlement the particular table in question. The letters to the Federal Reserve Bank of San Francisco and to the Comptroller of the Currency were then approved unanimously. Copies ara attached as Items 8 and 9. Daily computation of interest on savings deposits (Item No. 10). draft of letter had been circulated replying to an inquiry from the Pederal Reserve Bank of San Francisco concerning the propriety of a plan tclr computing interest on savings deposits on a daily basis. Briefly stated, the plan contemplated computation of interest on savings deposits 9/23/60 -12- at the rate of 3 per cent per annum on a day-to-day basis, with the interest to be paid, posted, and compounded at the end of each calendar quarter. Deposits received during the first ten days of each month would earn interest from the first of that month, and withdrawals made or accounts closed during the last three business days of a quarter would not result in loss of interest, as there were no minimum balance or minimum period requirements. The Federal Reserve Bank of San Francisco had enclosed newspaper advertisements by banks following plans similar to the one described, along with other material obtained from those banks. The Reserve Bank also transmitted a copy of a letter from Bank of America National Trust and Savings Association in which the position was taken that the procedure followed by banks utilizing such a system, while within the letter of the Board's Regulation Q, Payment of Interest on Deposits, "is clearly 1.1°t within the spirit of either the regulation or of Section 19 of the Act. As a practical matter, interest is being paid on demand deposits." Bank of America contended that the funds being solicited were, in many cases, not true savings but temporary deposits such as funds held in trust for future use. Its letter therefore suggested an amendment to Regulation Q that would have the effect of prohibiting the payment of Interest on savings deposits unless they remained in the bank for such tiMe as would, in the opinion of the Board, insure that the deposits were being used for genuine savings purposes. 311 9/23/60 -13The draft of reply to the Federal Reserve Bank of San Francisco held that, although the banks concerned might be accepting accounts that ordinarily would not seem suitable for savings deposits, the purpose of the deposit was not a test under the present Regulation and there would seem to be no way to prevent the payment of interest on a daily basis, although interest should not be compounded on less than a quarterly basis. The letter also stated that the question of an amendment to Regulation Q was under consideration but had not been resolved. During discussion of the proposed reply, Governor Shepardson directed several questions to the staff relating to whether the funds, including trust funds, that the member banks in question were soliciting could be regarded as savings deposits within the definition presently contained in Regulation Q. The comments made in response indicated that the position taken in the proposed letter would be consistent with Positions taken by the Board in the past relative to the placement in sltvings accounts of trust funds. In the view of the legal staff, the Practices under discussion could not be regarded as violating the present Provisions of the Regulation, but the question of the advisability of 61.mending the Regulation remained under consideration and would be the sllbject of a recommendation by the staff to the Board. Governor Shepardson then stated that he did not like the practice, elthough apparently nothing could be done about it in the present circumStances. 3f; 9/23/60 -14Governor Mills commented that the problem might tend to solve itself over the next few months if banks became less inclined to be as liberal in the payment of interest on deposits. As he recalled, it is a common practice of trust departments to keep trust funds awaiting investment in savings accounts rather than let them lie idle and thus lose income for the beneficiaries. Here, the objection of Bank of America centered on the rate of interest and the manner in which interest computed, and he could find no way of holding that a violation of the Regulation, even the spirit of it, was involved. What could be questioned was the judgment of the banks concerned in offering to accept funds at so high a cost on what amounted to a demand basis. After further discussion, the letter to the Federal Reserve Bank (3f San Francisco was approved unanimously, with the understanding that the staff would continue to consider, and make a recommendation to the 13°ard on, a possible amendment to Regulation Q. A copy of the approved letter is attached as Item No. 10. The meeting then adjourned. Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson approved on behalf of the Board on September 22, 1960, the following items relating to the Board's staff: 144tern1ty leave „ Susan Rowzie, Stenographer, Division of Examinations, to work an 7gditional two weeks, through October 14, 1960, before beginning maternity 4-eave. 9/23/60 -15- Outside activities Gary P. Smith, Legal Assistant, Legal Division, to accept appointment as a commissioned officer in the District of Columbia National Guard Reserves. Henry Tate, Messenger, Board Members' Offices, to work Dart-time as a real estate salesman for Hanson's Mortgage Company, Washington, D. C. Governor Shepardson today approved on behalf of the Board the following items: Memorandum dated September 22, 1960, from Mr. Koch, Adviser, Division of Research and Statistics, recommending the transfer of Bernice T. Mann from the position of Secretary in the Board Members' Offices to the Position of Secretary in the Division of Research and Statistics, with no Change in her basic annual salary at the rate of $5,820, effective September 26, 1960. . Memorandum dated September 16, 1960, from Mr. Kelleher, Director, Olvision of Administrative Services, recommending acceptance of the l'esignation of Loreto J. Clavelli, Supply Clerk in that Division, effective September 21, 1960. Memorandum dated September 22, 1960, from the Division of Examinations ( attached Item No. 11) recommending the employment of Charles N. Griffin a contractual basis for a period estimated from October 1 to December 1, °n, 19°0, with appointment as Federal Reserve Examiner. Letter to the Director, Graduate School, United States Department of Agriculture, Washington, D. C., confirming tentative arrangements for a sixteen-week training course in Technical Report Writing for members of the Board's staff at a total cost of $1,200. Secret 361r BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 1 9/23/60 AODRESS OffICIAL CORRESPONDENCE TO THE BOARD September 23, 1960 Board of Directors, The Oregon Bank, Portland, Oregon. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of San Francisco, the Board of Governors extends to January 2, 1961, the time within which The Oregon Bank may establish a branch at The Danes, Oregon, under the authorization contained in a letter dated November 25, 1959. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 2 9/23/60 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE HOARD September 23, 1960 Mr, H. A. Bilby, Vice President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. BiIby: This refers to your letter of September 15, 1960, and its enclosures, concerning the proposed issue by the International Bank for Reconstruction and Development of Two Year Bonds of 1960, due October 1, 1962. In that letter you state that it is proposed to amend Schedule A of the Fiscal Agency Agreement dated as of February 6, 1950, between the International Bank and your Bank to include the bonds in question. The Board of Governors approves of your Bank acting as fiscal agent in respect of the proposed issue by the International Bank of the Two Year Bonds of 1960, due October 1, 1962, and approves the execution and delivery by your Bank of an Agreement With the International Bank in the form or substantially in the form of Supplement 19 to the Fiscal Agency Agreement dated as of February 6, 1950, between your Bank and the International Bank, enclosed with your letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item NO. 3 FEDERAL RESERVE SYSTEM 9/23/60 WASHINGTON 25. D. C. ADDRESS OrPICIAL CORRESPONDENCE TO TN( 00ARD September 23, 1960 Board of Directors, Stockments Bank, Gillette, Wyoming. Gentlemen: This refers to your request for permission, under applicable provisions of your condition of membership numbered 10 to act in certain fiduciary capacities. Following consideration of the information submitted, the Board of Governors of the Federal Reserve System grants permission to the Stockmen's Bank to act as executor, administrator, and guardian, with the understanding that your bank will not accept fiduciary appointments of other kinds without first obtaining the permission of the Board. Very truly yours, (Sigaed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS oiltztt** OF THE Item No. FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Da14? 4 ADDRESS arricam. CORRESPONDENCE TO THE BOARD , 41 tAt M.0 44**** September 23, 1960 Board of Directors, Union National Bank of Laredo, Laredo, Texas. Gentlemen: The Board of Governors of the Federal Reserve System has given consideration to your application for fiduciary powers and grants Union National Bank of Laredo authority to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any Other fiduciary capacity in which State banks, trust companies, or other corporations which come into competition with national banks are permitted to act under the laws of the State of Texas. The exercise of such rights shall be subject to the provisions °f Section 11(k) of the Federal Reserve Act and Regulation F of the Board of Governors of the Federal Reserve System. A formal certificate indicating the fiduciary powers your bank is now authorized to exercise will be forwarded In due course. 4 9/23/60 Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. Item No. 5 9/23/60 UNITLD STATES OF ANLEICA BEFORE THE BOARD OF GOVIRNORS OF THE FEDERAL RE3ERVE SYSTEM JASHEGTON, D. O. In the hatter of the Application of NCR TH:iEST BAIT CORFU, TION DOCKET NO. BHC-57 for prior z,nproval of acquisition of sharcs of the pr000sed Roseville l'Iorthwestern National Bank, St. Paul, uinnesota ORD:R AFFIRMING NEARING OFFICFRIS ORDER By order dated September 13, 1960, the Hearing Officer aasigned to conduct the hearing in the above matter denied a request by Petitioners that they be admitted to participation in the said hearing with the full status of opposing parties, with riRht to conduct cross-examination, to present evidence, end to make arguments and submit briefs in any of the proceedings. By that order, hcuever, Petitioners were granted the opportunity to participate to the extent Specified in the order. On September 20, 1960) petitioners filed uith the Board an appeal from the order of the Hearing Officer insofar as that order denied petitioners' request to be admitted to the hearing Iiith full status as parties and insofar as the order "attempts to eliminate the factor of Iconvenience, needs, and welfare! of the area involved". 3;20 Upon consideration of the appeal and the statement of reasons and authorities in support thereof) and the Hearing Officer's order and accompanying memorandum, it appearing to the Board that no error has been committed by the Hearing Officer in limiting petitioners' participation to the extent and in the manner provided, and it appearing further that said order does not eliminate from consideration during the hearing the statutory factor of convenience needs, and welfare of the area involved, the Hearing Officer's order of September 13, 1960, is affirmed. Dated at aashington, D. C., this 23rd day of September 1960. By order of the Board of Governors. (Signed) Merritt Sherman ilerritt Sherman, Secretary. (SEAL) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 6 9/23/60 WASHINGTON 25. D. C. ADDRICS• OFFICIAL CORRESPONDENCE TO THE SOAR° September 230 1960 Confidential (FR) Mr. p. C. Johns, Chairman, Conference of Presidents, o/0 Federal Reserve Bank of St. Louis, St. Louis 66, Missouri. Dear Mr. Johns: On June 29, 1960, the Board of Governors approved a Proposal of the Conference of Presidents to supplement Lhe retirement allowances of certain groups of Reserve Bank employees who retired prior to becoming eligible for Social Security benefits. The Board has now considered a further proposal of the Conference at its meeting on September 13, 1960, to extend this suPPlementation program to provide immediate payments for members of the Retirement System who retired on a disability basis and 1010 are presently under age 50. The Board approves this supplementary proposal as submitted by the Presidents' Conference, subject to the approval of the 8,11PPlementa1 payments by the Board of Directors of the individual Federal Reserve Banks concerned, effective November 1, 1960. It ls understood that such payments are to be made in the manner prescribed in the Board's letter of June 29, 1960. A copy of this letter is being sent to the President of each of the five Reserve Banks concerned. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS oitittt**4 OF THE 14 40tft 401, FEDERAL RESERVE SYSTEM Itti s WASHINGTON 25. O. C. Item No. 7 9/23/60 A00111C88 OFFICIAL CORREISPONDENCC TO THE BOARD 614.14.4*** September 23, 1960 Mrs. Valerie R. Frank, Secretary, Retirement System of the Federal Reserve Banks, Federal Reserve Bank of New York, New York 161 New York. Dear Mrs. Frank: The Board of Governors interposes no objection to increasing the benefits of the Board Plan of the Retirement System of the Federal Reserve Banks in order that they may conform with those provided in Public Law 86-713, accelerating the commencing dates of Civil Service Retirement annuities, and for other purposes. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE 4o4.100/ Item No. 8 FEDERAL RESERVE SYSTEM 9/23/6o WASHINGTON 25, D. C. 4 4: 4 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD ek tat -40006 September 231 1960 Mr. John A. 01 Kane, Vice President and General Counsel, Federal Reserve Bank of San Francisco, oan Francisco 20, California. Dear Er. 01 Kane: Reference is made to your letter of August 26, 1960, advising that Mr. James M. McGrath, Assistant Chief, Los Angeles Office, Antitrust Division, United States Department of Justice, has asked to have for the use of the Department of Justice inforation that would be needed to expand Table 3 of your Bank's study Investigation of Banking in Arizona" to include therein the years 1951 through 1954 and 1956 through 1960. Your letter states that ln order to supply this information, it will be necessary for your Bank to obtain copies of the front and back of the December 31st Call reports of Southern Arizona Bank and Trust Company for each Year from 1956 through 1959, as well as for June 15, 1960, either from the Board of Governors or from the Federal Reserve Bank of Dallas. The Board has these call reports in its files and will send you copies for delivery to Mr. McGrath. The Board has written the Comptroller of the Currency asking whether his office wishes to have Mr. McGrath furnished with the data with respect to the three national banks named in your letter. As soon as a reply is received, You will be advised. It is noted that you plan to suggest to Mr. McGrath that he aPply directly to the Federal Deposit Insurance Corporation for - nformation needed in respect to nonmember insured banks. ' Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. - odlt40,44., 444 0 * ,• ..c.--7 - ---,..i 0 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM A* 4, %a 44 , 4 0 S. A' Item No. WASHINGTON 25. D. C. ADDRESS OfFICIAL CORRESPONDENCE TO THE BOARD September 23, 1960 The Honorable Ray M. Gidney, Comptroller of the Currency, Washington 25, D C. Dear Mr. Gidney: The Department of Justice is making an investigation in order to determine whether or not to institute antitrust Proceedings based upon banking developments in Arizona, The IPePartment has requested, and the Board of Governors has furnished IA with, certain unpublished information in this connection, and Board is now in receipt of a further request for copies of ,;he front and back of the December 31st call reports of certain tate member banks for each year from 1951 through 1954 and from 1956 through 1959, as well as for June 15,1960. The Department lesires similar information as of the same dates in respect to 1ue followi ng national banks: Valley National Bank, Phoenix, ! 1-zona; First National Bank of Arizona , Phoenix, Arizona; and 'ne First National Bank of Holbrook, Holbrook, Arizona . The Board is furnishing the Department with the above data respecting the State member banks. The 1 .eederal Reserve Bank San Francisco has in its files and can furnish the Department :?th the above data with respect to the named national banks, but naJ11 not do so unless the Board receives advice from your office a t your office has no objection. Accordingly, it would be PPreciated if you will advise the Board in the premises. 9 9/23/60 Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary, BOARD OF GOVERNORS **4 iitOW QC1'; '' 'CL 4 OP tr OF THE FEDERAL RESERVE SYSTEM 4:1, silip) : t' tr " 4*,„4krastso,,t , ' -4000** WASHINGTON 25, D. C. Hi Item No. 10 9/23/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 23, 1960 Mr. H. N. Mangels, President, Federal Reserve Bank of San Francisco, San Francisco 20, California. Dear Mr. Mangels: This refers to your letter of August 24, 1960, presenting the question whether plans adopted by certain member banks of your District for computing interest on savings deposits on a daily basis e°mPlY with the previsions of Regulation Q. As you know, the Board in a ruling published in the 1936 Federal Reserve Bulletin at page 192 expressed the opinion that a member bank is not prohibited from paying interest on a savings account notwithstanding the fact that the funds have actually been °n deposit with the bank for a period of less than three months, and even though the account is closed between the bank's regular interest Paying dates. In effect this means that a member bank may compute ' Ilterest on a daily basis, and the advertising material of these member banks, submitted with your letter, does not appear to be in contravention of this authority. The banks may be accepting accounts which ordinarily uld not seem suitable for savings deposits. However, it is noted 11 ,Z3,m the inter-office memorandum of Union Bank dated December 18, s7)9, that care is to be exerted in order to prevent the use of e:vings accounts as checking accounts and consideration is to be P-ven to the possibility of this being "temporary money" and to 1 1 011 long this ' ,term money" is expected to remain on deposit. Regardeee of the purpose of the deposit, which is not a test under the Pjesent Regulation, if such accounts qualify as savings deposits 0"ere would seem to be no way to prevent the payment of interest en a daily basis having in mind, of course, the limitation on Pounding interest on less than a quarterly basis. r BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM H. No Mangels The question whether an amendment to Regulation Q should be adopted which would ensure the use of savings accounts for genuine "savings" purposes is under consideration but has not been resolved at this time. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS ' Or THE FEDERAL RESERVE SYSTEM ffice Correspondence Board of Governors Item No. 11' 9/23/60 Dee September 22, 1960, Subject: Employment of Charles N. Griffin of Examinations (retired) on contractual basis and his appointment as Federal Reserve Examiner. )4 CONFIDENTIAL (FR) There is shortly to be put into effect a program for the feiTergency storage of unissued Federal Reserve notes at the Salt Lake ' 41.1tY Branch of the Federal Reserve Bank of San Francisco. It is con' l emPlated that shipments of the currency from Washington will commence ear9-Y in October and extend over a period of approximately two months. As presently viewed, the currency to be stored will constitute ! .111 inactive reserve and therefore it is desirable that it be held under , 1 11e permanent seal of the Board's examiners, as well as the seal of the 'leserve Bank's General Auditor. In view of the large quantity of curtncY and the limited working space that will remain in the vault after Gee currency is placed therein, it is felt that representatives of the ie!leral Auditor and of the Board's examiners should be on hand at the stowage of the currency to avoid subsequent re-handling. In view of the schedule of the field examining staff for the rte he t several weeks, Chief Federal Reserve Examiner Schaeffer feels that i cannot designate a member of his staff for this assignment. Neither it practicable for the Division of Examinations to make available a tr from its office staff at the present time. In the circumstances, 01,e elaployment, on a contractual basis, of recently retired examiner 103 N. Griffin for this special assignment is recommended. It is en' alated that his services will be required from October 1 to December 1, Q We have determined from Mr. Griffin that he is available. The . gement will require that Mr. Griffin travel from his home at Lake P South Carolina, to the present duty station of the field examiners tvoi that he can spend a day for indoctrination in the procedures to be kitlewed in examining and controlling the currency. From that point he co'l proceed directly to Salt Lake City to remain until the program is )1Pleted, after which he will return to his place of residence. Z is suggested that Mr. Griffin be retained at a fee of $35 Per day. on ' .4ay. It t is contemplated that he will not be compensated for the days : 41j-eh the Salt Lake City Branch is normally closed for business, unless .41f Reserve Bank elects to continue to process the currency on such days. Griffin has stated that he prefers to travel to Salt Lake City by rail; _ To: Board of Governors 2.. it is felt that travel days should be considered work days insofar as ' 1113 being paid his fee is concerned. In addition to the aforementioned fee, it is recommended that Mr. Griffin be paid transportation expenses and the usual per diem in lieu of subsistence of ca2. (In view of his continuing travel status while he is on this assignment, it is assumed that the per diem in lieu of subsistence would apply on nonwork days.) It is recommended also that Mr. Griffin be commissioned as an examiner for the duration of this assignment in order that he may have the proper credentials and status. Although no provision was made in the 1960 budget for this Unforeseen contingency, there are budgetary offsets arising from vacancies that have existed in the field staff.
@FedFRASER